This three-part blog series on California SB 108, a bill which changes provisions in the Surface Mining and Reclamation Act of 1975 (SMARA) pertaining to “idle” mines, is based on a paper I first presented at the CalCIMA Conference in October 2011.

Background: What is the Interim Management Plan Problem?

SB 108 is designed to address some (but not all) of the problems existing in the current SMARA statutory scheme regulating so-called “idle” mines through the requirement of submitting an interim management plan (“IMP”). Having passed though the legislature without a single no vote, the bill was signed by Governor’ Jerry Brown on October 5, 2011 will be effective on January 1, 2012. This presentation identifies the problems with the current regulation of idle mines though IMP requirements, explains SB 108, including its key terms and the limited window for mine operators to take advantages of SB 108’s “change of status” provisions, and finally identifies IMP problems not addressed by SB 108 and proposes ideas for addressing such problems.

Defining an “Idle” Mine: Under existing law, a surface mining operation is considered “idle” when surface mining operations are curtailed by more than 90 percent of the operation’s previous maximum annual mineral production for a period of one year or more, with the intent to resume those surface mining operations at a future date. SMARA Section 2727.1. [Note that a surface mine is not classified as idle if there is no intent to resume mining operations. In such a case, the mine is classified as active and undergoing reclamation, or considered abandoned.]

Submitting an Interim Management Plan: Within 90 days of the surface mining operation becoming “idle” under Section 2727.1, the operator must submit to the lead agency for review and approval an interim management plan (“IMP”). SMARA Section 2770(h)(1). Review and approval of an IMP is not considered a project for purposes of CEQA. Id. The approved IMP is considered an amendment to the surface mining operation’s approved reclamation plan. Id.

Failure to Timely Submit an Interim Management Plan: Unless review of an IMP (or an appeal) is pending before the lead agency, a surface mining operation which remains idle for over one year after becoming idle without obtaining approval of an IMP is considered “abandoned” and the operator must commence and complete reclamation in accordance with the approved reclamation plan. SMARA Section 2770(h)(6).

Problems With The Idle Mine Definition: The current definition of “Idle” creates several challenges for the industry. Some of the more important issues are identified and discussed below in the context of how they might be resolved or mitigated:

Application to Active Mines. Counter-intuitively, a facility could be active and operating at a significant capacity yet still be “idle”, e.g., an aggregate operation producing just less than 100,000 tons per year would be considered idle if it had previously produced one million tons per year. This application of the label of “idle” to a vigorously producing mine could be overlooked by operators who may not consider a downsized operation to be “idle.”

What is “Mineral Production.” There is no clear definition of “mineral production” in SMARA or the SMARA Regulations, thereby creating considerable ambiguity in the use of the word “production” in the “idle” definition, e.g., does production include overburden? And does the mining and processing of ores imported from a neighboring property constitute “production”?

Idle Notwithstanding Substantial Expenditure for Operations. Under some definitions of production, it would appear that a facility could be considered “idle” notwithstanding the expenditure of substantial sums of money to conduct a variety of important and necessary “surface mining activities” that do not result in the sale of product in the short-term, but will lead to increased future product sales, e.g., the removing of significant tonnages of waste rock during periods when new portions of the mine are being developed.

Rigid Mathematical Approach. The rigid mathematical approach to label an operation as “idle” using percentage reductions in annual production provides no flexibility to account for temporary circumstances beyond the control of the operator, such as the current economic downturn which has substantially curtailed both excavation and sales at many facilities pending recovery from the deep recession in which we now find ourselves. Put another way, using an exclusively mathematical approach to determine whether an operation is “idle” or “abandoned” is an inflexible approach that ignores other factors that may in fact demonstrate the operation is not idle.

Increases in Production Could Cause “idleness.” Again counter-intuitively, increases (not decreases) in production could also lead to application of the “idle” or “abandoned” concept. Take, for example, the situation where a very large, local construction project causes a 12-fold increase in a mine’s annual production for two years. In the third and fourth years, when production returns to “normal” levels, the resultant 12-fold decrease in production could cause the mine to be classified as “idle” even though the mine has never operated below historical production levels. Such a mine would certainly not be considered “idle” by anyone in the mining business.

Problems With The IMP Requirements: In addition to the definition of “idle,” there are other problems with the current requirements to obtain an IMP.

Record Problems. Mines can be in operation for many decades in some cases and change ownership over time leading some operators to be unaware of, or unable to document, their historic maximum annual production. For example, operators who may have been involved in complex vested rights proceedings are likely aware of the difficulties that can arise in demonstrating past production levels. This can result in an operator being unaware of when the operation has fallen below the 90 percent threshold, and thus, when the operation has become idle.

[Note: Local lead agencies only started receiving annual mineral production data after
enactment of SB 668 in 2006 and may lack the records to properly evaluate compliance or warn operators of the need to file an IMP.]

Due Process Problems. There are no requirements for lead agencies or OMR to notify operators that an operation has become “idle.” Also Section 2770(h)(6) does not provide any way for an operator whose operation has become mathematically “idle,” but who did not file an IMP within the time window provided in the statute, to correct the failure to file after-the-fact. Thus, an operator who was unaware that the operation had become mathematically “idle,” and who therefore failed to file an IMP in a timely manner, may have little or no administrative appeal options or other non-legal recourse from the failure to file and resulting statutory “abandonment.” Because findings of “idleness” or “abandonment” not only drive the timing of reclamation, but may also potentially impact entitlements and vested rights to operate, these provisions appear out of step with SMARA’s overall scheme to provide opportunities to cure violations, and may also violate legal due process.

In part two of this three-part series on California SB 108, I will discuss what SB 108 does, who is affected by SB 108 and cover other factors to consider.

In part three of the series, I will raise unresolved problems with SB 108 and offer ideas to address them.

If you would like a copy of the PowerPoint presentation on this topic, which I delivered at the CalCIMA conference, please send your request to cjames@jmbm.com.

Kerry Shapiro has a comprehensive government, land use, environmental, and natural resources practice, with extensive experience working with NEPA, CEQA, the Endangered Species Acts, the Mining Law of 1872, FLPMA, the Mineral Materials Act, SMARA, and the Clean Water Act, in relation to various entitlements and public land matters and related litigation, at federal, state, and local levels. Kerry has also specialized in representing the construction and building materials industry on mineral extraction and land development projects for over 20 years, and has secured entitlements for the largest federally-approved sand and gravel project in the United States, obtained the first-ever vested rights confirmation from the State of California for the largest construction aggregate deposit in California, and successfully represented clients before the Ninth Circuit Court of Appeals on federal endangered species and mining law matters. Contact Kerry at KShapiro@jmbm.com or 415.398.8080.

Kerry Shapirois the Chair of JMBM's Natural Resources and Mining Group and co-chairs its Construction and Building Materials Group. Kerry serves as General Counsel to the California Construction and Industrial Materials Association (CalCIMA), and chairs the association's Legal Action Committee. He has represented the mining industry on mineral extraction and land development projects for over 25 years, providing legal services on government, land use, environment, and natural resources matters, at federal, state, and local levels. His experience includes securing entitlements for the largest federally-approved sand and gravel project in the United States, obtaining the first vested rights confirmation from the California State Mining and Geology Board for the largest aggregate deposit in California, and successfully representing mining companies before the Ninth Circuit Court of Appeals and state courts of appeals on mining, CEQA and federal endangered species matters. Contact Kerry at 415.984.9612 or KShapiro@jmbm.com.

Martin StratteMartin Stratte is a land use and environmental attorney who assists with the entitlement of complex projects throughout California in accordance with CEQA, NEPA, and California's greenhouse gas emission and climate change regulations. He also represents clients in related litigation. Contact Martin at MStratte@jmbm.com or 415.984.9627.

Jordi Venturais a member of JMBM's Natural Resources and Mining Group. His practice focuses on the representation of mining companies in Latin America, where he has conducted effective mining legal diagnoses and effective diagnoses of social licenses to operate. He represents the mining industry in mining leases, joint venture and operating agreements, option agreements, exploration and development agreements, and mine operating contracts. He has been the lead attorney in mergers and acquisitions, divestitures of business entities and other land transactions. Jordi Ventura is licensed to practice in Utah and Colorado; he is not licensed in California. Contact Jordi at JVentura@jmbm.com or 415.984.9689.